Can financial directors be held liable for company debts?

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I have just agreed to serve as the financial director for a private limited company in Scotland. This is a role I’ve never filled before, and so I’m not entirely sure what it entails. My biggest concern is financial liability, though. Should the company go into debt, will I be held accountable for that debt?

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No, you are not held personally liable for company debts as a director (even as a financial director) unless:

  • You hold shares in the company - you will be liable for the nominal value of each share
  • You have promised a personal guaranteed to the company in the event of insolvency
  • Your conduct as a director has been inappropriate in any of the following ways when the company is insolvent:
    • You have breached the terms of your a personal guarantee
    • You implemented fraudulent methods to raise company finances
    • You authorised dividends after the company became insolvent
    • You undersold or disposed at no value any assets belonging to the company
    • You used company finances to fund non-business activities

Other than these exceptional circumstances that can be easily avoided, company directors are not usually legally required to pay anything toward business debts

a year ago
 

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